The year 2025 was characterized by low-growth stabilization under sustained profitability pressure. In Europe,1 grocery sales grew by 3.4 percent—consumer prices continued to increase moderately by 2.9 percent, while volume grew by 0.6 percent, with marginal downtrading at –0.1 percent.2 While cost and margin pressure remained the top concern for CEOs, overall executive sentiment improved, with a majority expecting market conditions to remain stable or improve. Consumer behavior also showed emerging markers of stabilization, with only limited shifts in spending patterns compared to 2024—private label continued to gain relevance, reaching a 40 percent share, while growth of online shopping decelerated.
For 2026, the grocery consumer environment is expected to be relatively stable compared to 2025, on average, and may be impacted by the conflict in the Middle East. However, while the market is stable on the whole, there are substantial shifts between income groups and countries, indicating changing consumer needs. Market growth remains structurally low, but we expect a slight increase in volumes across Europe for 2026. Grocers are expected to keep strengthening their private label propositions, selectively pursuing growth opportunities beyond the core, building scale through M&A and alliances, and improving AI and technology execution. Taken together, these moves signal that while grocery remains under pressure, renewed momentum is visible.
Meeting evolving customer needs
1. A polarized consumer recovery
Price pressure is easing on average, but income and generational divides are widening. Low-income households look for even more promotions, while high-income households are trading up.
Price and promotion pressure is gradually easing from 2023, marking the third consecutive year of slight improvement. The share of shoppers actively seeking ways to save money decreased from 55 percent in 2023 to 46 percent in 2026, and promotion seeking from 44 percent to 37 percent. But these developments are not consistent across income groups. Medium- and high-income consumers have continually become less focused on price and promotions over the past four years. Among low-income consumers, price-saving intent stayed stable from 2025 to 2026, while intent to seek promotions increased (Exhibit 1).
At the same time, premium options are gaining relevance, with the strongest trade-up intent since 2023. Net intent to purchase premium or high-quality food has increased by one percentage point since 2025 and rebounded significantly from –5 percent in 2023 to 3 percent in 2026. Millennials showed the strongest uplift among generations (up five percentage points versus 2025), while high-income consumers had the highest increase among income groups (up two percentage points versus 2025).
Convenience food is also showing a slight increase in popularity (up two percentage points in comparison to 2025), driven by Gen Z and millennials. Intent to purchase ready-to-eat meals and food-to-go grew slightly (by two percentage points versus 2025). Gen Z (up eight percentage points to 11 percent) and millennials (an increase of four percentage points to 0 percent) are driving the shift toward convenience, whereas Gen X (no change at –5 percent) and baby boomers (down one percentage point to –25 percent) are moving in the opposite direction, with a reduced intent to buy ready-to-eat meals.
The demand for healthier products remains stable, but the willingness to pay for these options is increasingly polarized among generations. Gen Z (18 percent, up one percentage versus 2025) and millennials (3 percent, a four percentage point increase) are both willing to trade up for health, while Gen X (down 2 percent) and baby boomers (a 9 percent decrease) remain less willing to pay a premium for healthy options.
2. Convenience of cooking
A generational shift is fueling foodservice growth—82 percent of Gen Z eat ready-to-(h)eat once a month or more. Grocers have reacted by adding foodservice offerings. The industry lines between convenience and foodservice are becoming increasingly blurred.
Foodservice growth is outpacing grocery sales, expanding at 6.8 percent between 2022 and 2025 (CAGR), compared to 4.8 percent for grocery over the same period.3 This divergence has accelerated since the COVID-19 pandemic and reflects a long-term shift away from home cooking.
Growth is increasingly driven by the younger cohorts and is expected to continue. Forty-seven percent of Gen Z and 40 percent of millennials consume food-to-go at least weekly (Exhibit 2). Purchase intent for ready-to-(h)eat increased by seven and two percentage points for these two groups, respectively, compared to 2025. Also, reported intent to cook from scratch decreased among younger consumers between 2025 and 2026 (down four percentage points for Gen Z; down one percentage point for Gen X and baby boomers).
Within grocery retail, products for immediate consumption are growing faster than overall grocery at about 7 percent.4 Despite these positive dynamics, growth is shifting from volume-led to price-led, with increases in price per unit being the primary driver of spending increases (negative volume growth). Grocers are capturing a small share but growing rapidly in food for immediate consumption; the rest goes to foodservice. The grocers’ share has increased by one percentage point in the past two years (12.6 percent in the second quarter of 2025 versus 11.6 percent in the second quarter of 2023).5
To capture a larger share of the growth of consumption away from home, many grocers are exploring integrated foodservice and coffee concepts. Also, they are extending their ready-to-(h)eat offerings and are integrating served food counters with hot convenience food into their store formats—increasingly blurring the industry lines between foodservice and grocery. In parallel, retailers are rethinking store layouts to make foodservice and ready-to-(h)eat options more visible and easier to access.
3. Online diverges, loyalty fragments
Online growth has been uneven across Europe. The channel gains relevance in many but not all markets. Consumers are shopping online at different grocery banners than they shop at offline.
Online growth remains strong, but continues to diverge. Overall online sales in Europe grew by 6.8 percent between 2024 and 2025, yet decreased from the 7.8 percent growth between 2023 and 2024. Profitability is improving, with online operations beginning to break even on a fully allocated cost basis. Ahold Delhaize, for instance, achieved e-commerce profitability in 2025.6 That said, online growth is not consistent across Europe—in Portugal and Sweden, the online channel is losing relevance. The net intent of consumers to buy more groceries online is still positive in many countries, but often significantly lower than it was last year.
Adoption also varies significantly by geography and population, ranging from more than 20 percent in selected affluent urban areas to less than 5 percent in rural regions.7 According to our consumer survey, 12 percent of shoppers used scheduled delivery weekly, and 69 percent did so less than once monthly. About half of all Europeans did not shop for groceries online at all.
Despite grocers’ efforts to create omnichannel experiences and operations, the online channel remains separate in the minds of shoppers. Of those shopping online in Europe overall, nearly half do so at retailers that are different from those they buy from offline. Nearly one-third of online shoppers prefer the same grocer online as they do offline (Exhibit 3).
The separation of online and offline in the minds of consumers is also reflected in customer satisfaction scores. For online stores across Europe, offering great value for money most strongly correlates with a high customer satisfaction score, followed by high product quality and the ease of use of a retailer’s app or website. In contrast, for offline stores, consumers consistently look for convenient locations, low prices, and promotions. Out of the 40 retailers with both online and offline presence that we analyzed, 30 obtained higher customer satisfaction scores in the online channel, indicating that online is perceived to offer a better shopping experience than a brick-and-mortar store.
Addressing the growth and productivity challenge
4. Fighting persistent structural costs
European grocery retail operates under structurally higher cost levels than in the past, and sustained capital intensity. Selling, general, and administrative (SG&A) expenses remain elevated but have begun to stabilize, while earnings before interest and taxes (EBIT) margins continue to be under pressure.
SG&A expenses reached their highest levels in 2024 and remained elevated in 2025. After a dip to 19.0 percent of revenue in 2022 (the average across nine major European retailers), SG&A reached 19.7 percent in 2025, according to our analysis. This increase is widespread across major grocery retailers in European markets, indicating structural cost inflation rather than isolated inefficiencies (Exhibit 4).
Cost pressure in European grocery retail remains structurally elevated, with EBIT margins stable at 2.8 percent in 2024 and 2025. While grocery retailer margins were flat year over year, this stabilization marks a pause rather than a recovery, given that margins have continually decreased in previous years, costs have remained high, and volume has stayed flat. This is reflected in our CEO survey this year. Cost and margin pressure remained the number one concern for grocery CEOs for the fifth consecutive year.
Labor cost inflation has become a structural pressure point, consistently outpacing food inflation across most European markets. While European consumer prices rose moderately (2.4 percent year over year, December 2025),8 labor costs increased significantly faster than food prices in many countries. In Germany, for instance, wages rose 4.0 percent, while food inflation sat at 2.2 percent. Across Europe, labor costs increased by 5.1 percent on average, compared to 4.0 percent food inflation, with several markets showing a two to three percentage point gap between labor cost increases and food price inflation.9
While operational cost remains on a high level, capital expenditure (capex) increases. In addition to traditional investments into store expansion and refurbishments, increasing investments into IT, AI, and automation increases capex requirements for grocers. Our analysis of company reports shows that the capex-to-revenue ratio grew slightly from 2.8 percent in 2024 to 2.9 percent in 2025,10 with several retailers investing up to 6.0 percent of sales in capex.
5. Growth beyond the basket
European grocers face a structurally tougher growth environment than in previous years. While volume growth has become positive again, it remains low, and footprint expansion is no longer a reliable scaling lever for many grocers. Competition for market share is intensifying, making value pools beyond retail increasingly important.
Structural volume stagnation limits the potential for top-line growth. Volume is projected to stay muted and only increase by approximately 0.2 percent CAGR through 2030 (Exhibit 5). The main reasons for the low volume growth are a moderate population growth and a shift of calories to foodservice; inflation therefore remains the main driver of market growth. Premiumization could drive some additional growth. Although the adoption of glucagon-like peptide-1 (GLP-1)11 drugs is increasing, their total impact on grocery in Europe is expected to remain below a 1 percent decline in revenues.
Footprint expansion no longer delivers substantial growth. Since 2019, grocery selling space in the EU-11 countries expanded by about 4.6 percent, while volume (including online) grew by only approximately 1.7 percent. In effect, productivity in volume per square meter continually decreased, creating additional cost pressure and reducing the ROI for new stores. As a result, most grocers can no longer rely on footprint expansion as a growth driver, making same-store sales and online important sources of growth.
Limited growth in the core business increases the relevance of adjacent value pools. Among the various business models beyond traditional retail, retail media (in-store advertising, apps, and websites) stands out as the most consistently scalable adjacency. Other adjacencies—such as pharmacy, financial services, and logistics-as-a-service—have delivered mixed results so far. Pharmacy, for example, has proven successful in several markets. Financial services and other adjacencies, however, have been promising for only a few companies, while many others have exited these businesses. Retail media remains structurally attractive and scalable, with monetizing first-party data and on-site traffic as its primary business model. Retail media is among the fastest-growing profit pools in grocery, with projected growth of around 20 percent (CAGR, 2025 to 2028,12 and EBIT margins reaching about 70 percent).
6. Making scale an advantage
More M&A activity, both nationally and internationally, is expected as scale is becoming essential for sustained competitiveness and as capturing cross-country synergies becomes more feasible.
As strong private label propositions and investments in technology gain importance, scale is becoming a decisive competitive advantage. Large grocers benefit from economies of scale in their private label production and can spread rising technology and automation costs more effectively across higher volumes. As a result, competitive strength is increasingly dependent on structural scale advantages.
Retailers are looking to create pan-European synergies and move beyond domestic scale. Carrefour is one of the grocers that exemplifies this shift. It is further developing the group’s European purchasing platform, Eureca, and accelerating its digital transformation.13 Leading European discounters use pan-European buying and standardized assortments to negotiate better terms and streamline operations. As supplier networks globalize and cost pressure rises, these models show how grocers can use cross-border consolidation to achieve margin gains and increase efficiency.
Driven by these factors, more M&A activity can be expected nationally and internationally. In 2025, deal activity remained high, with 28 grocery retail M&A transactions announced or completed across Europe, up from 19 deals in 2022, an increase of 47 percent (Exhibit 6).14 Around 65 percent of deals were driven by local and national companies, using M&A to strengthen domestic scale. Only about 35 percent of deals in 2025 were carried out by pan-European companies. They focused primarily on portfolio optimization rather than expansion. Looking ahead, M&A activity is expected to accelerate, driven by strong competition and a higher importance of scale benefits because of an anticipated further increase in IT costs and growing private label penetration.
Alliances remain an important complement to M&A and continue to move to European price negotiations. Buying groups increasingly focus on negotiating harmonized net prices across European markets. However, success of alliances is not granted, with retailers joining or leaving alliances as their strategic needs evolve.
Building differentiation
7. From labels to brands
Private label growth in Europe has continued, reaching a value share of 40 percent across the EU-11 in 2025.15 The growth is driven by volume and a shift to higher quality. Private labels increasingly drive innovation and evolve into brands in their own right.
The share of private labels continued to grow by 0.4 percentage points in 2025, reaching 40.0 percent across the EU-11.16 In eight of the EU-11 countries analyzed, private label value penetration increased. Spain and the Netherlands experienced particularly strong uplifts by 1.3 and 0.8 percentage points, respectively. The growth was driven by higher average prices, while volume went up in some markets and down in others.
Private labels are no longer solely competing with manufacturer brands on price. Increasingly, private label growth is driven by the diversity of assortment offered, including budget, premium, free-from, organic, local, or other forms of consumer-driven innovation. In the United Kingdom, for example, premium private labels represented the fastest-growing private label tier in the past year, expanding by around 9 percent annually.17
Private labels are also setting the pace for innovation. In multiple categories, private labels are innovating faster than manufacturers. The private label share of total innovation activity—measured by the number of new product launches, new varieties, and range extensions—sits at 44 percent in Western Europe across all grocery product categories, and as high as 70 percent for food categories (Exhibit 7).
Retailers that double down on private labels are well positioned to capture significant market share gains. Our analysis of 120 grocers in Europe shows that the share of private labels or brands (or both) and their perceived quality have been the most important drivers of market share gains in the past six years. Leaders in the private brand space had a two to three times greater probability of gaining market share than all other grocers in their countries. Private label and private brand shelf space was a more important driver of market share gains than price.
8. Resetting the CPG–retailer relationship
Shrinking margins, private label growth, and an increasingly differentiated small brands landscape are putting pressure on the relationship between consumer packaged goods (CPG) companies and retailers, leaving both parties worse off than in the past.
Flat volumes and shrinking margins are continuing to put pressure on CPG–retailer relationships. Retailers face cost pressure, flat volumes, and high price sensitivity (46 percent of European consumers seek additional savings),18 while CPGs contend with low or negative volume growth in many categories, low innovation productivity (more than 75 percent of innovations fail),19 and rising promotional demands. Moreover, recent shareholder returns for both CPGs and grocers have been among the lowest of all industries, further adding to the pressure.20
Grocers are expanding their private label offerings not just to satisfy consumer demand, but also to increase differentiation from their competitors. Our research shows that the quality and number of available private label products have become key criteria for consumers to choose a store. When it comes to branded products, store choice is determined primarily by where these can be found at the lowest price. Consequently, grocers are trying to expand their private label offering and offer attractive prices for branded products.
Large CPGs lose to private labels on price and to smaller brands on functionality and innovation. Our research reveals that customers typically switch away from large brands either to private labels for lower prices or to smaller brands that offer new functionalities and innovations. Brands that allowed the price gap with private labels to widen lost market share, while brands that reduced the price gap gained share (Exhibit 8).
As a result of these dynamics, negotiations between branded manufacturers and grocers are increasingly difficult and are often focused on price alone, leaving both parties with lower overall value creation in a zero-sum game over margin. To turn the relationship again toward joint creation of growth, CPGs and grocers could move beyond transactional negotiations toward strategic category partnerships with joint innovation, exclusive products, more comprehensive data sharing, supply chain collaboration, and retail media collaboration.
Turning AI into an advantage
AI benefits are not yet being realized. In our 2026 Grocery CEO Survey, 47 percent of respondents name adopting AI and automation as one of their top three priorities, second to cost and margin pressure, signaling that AI has moved from experimentation to strategic relevance. Yet, despite the recognition of the importance of AI, tangible value creation remains limited and skepticism persists. Seventy percent of CEOs report no measurable EBIT impact from AI so far, or say it is too early to tell. Only 3 percent report an EBIT increase of more than 5 percent from AI. Looking ahead, expectations remain cautious: 56 percent of respondents think it is too early to estimate future impact, and only a small minority foresees an EBIT increase of more than 10 percent in the next three years.
This gap between perceived importance and proven impact reflects that the grocery sector’s AI journey is still nascent. While around 30 percent of respondents report some initial profit and loss (P&L) impact—below 5 percent—organizational readiness is still maturing: 83 percent of grocers are in the emerging or developing stages regarding their AI strategy. Not a single respondent reports that they have achieved full, enterprise-wide embedding of AI. More advanced applications are even further from full implementation—only 8 percent of CEOs report established agentic AI use cases, and no organization has scaled agent deployment across functions.
It is this gap between perceived importance and realized value that guides our focus. AI is reshaping grocery across three distinct layers:
- Demand (agentic commerce): redefining how consumers discover, select, and purchase
- Decisioning (the agentic organization): rewiring core processes from periodic planning to continual, data-driven execution
- Execution (physical AI): automating the physical flow of goods across the value chain
Underpinning these three layers is technology ROI, serving as the enabling discipline that ensures investments translate into measurable business value.
Taken together, these changes reflect where value will be created next and where decisive grocers could drive competitive advantages in an industry that is still characterized by skepticism and hesitation regarding AI. We believe leaders must move beyond understanding “what’s happening” to making critical strategic choices—now.
9. The agentic consumer
Agentic commerce provides opportunities for grocers both within and beyond their digital ecosystems.
Younger generations lead the adoption of agentic commerce as a new form of shopping. Agentic commerce is a new digital shopping model enabled by AI-powered agents. These agents support and optimize purchasing decisions on behalf of shoppers. In future, agents could also execute purchases for shoppers. By 2030, an estimated $3 trillion to $5 trillion of global B2C retail spending could be performed by AI agents,21 as shoppers become increasingly comfortable with letting agents act on their behalf. Early signs of this shift are visible. About 12 percent of consumers have already used AI in their grocery shopping journey.22 Of these early adopters, 40 percent use AI to create meal plans, 37 percent use it to research specific products, and 36 percent find the best prices or recipes aligned to their dietary preferences with it. Younger shoppers lead the way: 28 percent of Gen Z shoppers intend to use more AI for grocery shopping, compared to 21 percent of millennials, 13 percent of Gen X, and 6 percent of baby boomers (Exhibit 9).
As a sector, grocery retail is expected to follow on the adoption of agentic commerce, rather than lead. Agentic commerce has the potential to change the way grocers offer products, communicate value for money, and advertise. That said, implementation could be delayed by the complexity of grocery shopping with its high frequency, diverse baskets, large number of low-price items, and last-mile challenges. As a result, grocery retail is likely to follow fashion and electronics with agentic AI, as it has with online shopping.
Current applications range from generic suggestions to preference-based baskets. Various levels of applications offer customers different services according to preference. These range from assembling weekly shopping lists to comparing prices and promotions to building ready-to-buy baskets. In the future, agents could be granted greater autonomy to execute orders on behalf of customers, differentiating between best-value and best-quality options depending on the occasion and individual priorities.
Opportunities for grocers arise both within and beyond their digital ecosystems. But grocers have several strategic choices to make, including deciding on owning the customer interface versus participating in third-party agent ecosystems. They need to determine if they want to share data openly for a more seamless customer experience versus keeping data as a proprietary advantage. And they need to decide on their level of risk appetite, trading off speed of scaling against risk.
10. The agentic organization
AI agents have the potential to advance operational excellence, lift best practices, and reduce cost across a grocer’s operations.
Agentic AI can automate complex or resource-intensive activities, unlocking new efficiencies. With natural language interfaces, AI agents can handle routine tasks, complementing the work of administrative staff, knowledge workers, and employees in stores and supply chains. This allows human employees to focus on strategic activities requiring creativity and judgment. AI agents bring consistency and reliability, working continually, and applying best practices uniformly. Our analysis shows that 40 to 50 percent of routine activities in grocery headquarters could be automated by AI agents, enhancing productivity and enabling teams to drive innovation and growth.
Agentic AI brings not only greater efficiency, but also more reliable and consistent execution, and opens up new opportunities for grocers. An AI agent can execute tasks consistently at best-practice level across all teams and ensure that processes are executed in a consistent manner—so that, for example, promotion planning follows the same logic across categories, or supplier performance reviews are conducted using consistent metrics. Agents can also absorb large volumes of information from different systems and synthesize them quickly, for example, combining sales data, supply chain information, and market data to generate recommendations for district and store managers. These capabilities can help improve outcomes with richer insights and greater consistency. In addition, agents can execute tasks that were previously too expensive or time consuming, such as making personalized calls to customers or automating certain negotiation steps with long-tail suppliers.
While the potential is substantial, so is the effort required to capture it. Only about one-third of grocery CEOs say that they have achieved meaningful P&L impacts from AI so far, according to our CEO survey. One key challenge is that all straightforward activities have already been automated with regular IT tools. The tasks that are currently still handled by humans are often fragmented, involve many exceptions, require access to different IT systems, depend on creativity, or include human interactions. This complexity means that thousands of agents may be required to reach the full automation potential at grocery headquarters.
Nevertheless, several grocers are already experiencing early benefits from agentic AI. Examples include automated negotiations with smaller suppliers, category and store performance management, data entry, solving exceptions in ordering processes, and managing supplier deliveries’ delays by identifying alternative solutions (such as other sources or routing). Such cases demonstrate the potential of agentic AI, and help early adopters get a better sense of what it takes to generate value.
To capture the full benefit of agentic AI, grocers need to adapt elements of their operating model, supported by comprehensive training, change management initiatives, and revised governance. Automating existing processes is an important first step, but additional value could emerge if some processes are rethought over time to reflect AI agents’ capabilities. Agentic AI may also influence roles and how teams are structured. In some cases, team leaders might increasingly supervise both employees and AI agents, coordinating how work is distributed between them. At the same time, teams supported by AI agents could gain productivity or respond quicker to operational issues. This, for example, could give category teams broader responsibility and increase the number of categories they manage.
Given the magnitude of the transformation that agentic AI requires, it could take several years for grocers to capture the full potential. That said, early movers could create competitive advantage by testing and learning, as happened with advanced analytics in the past.
11. Physical AI—the next frontier?
Context-aware robots could unlock a new automation wave. While the near-term focus is on warehouses and backrooms, deployment on the shop floor may soon be ready to scale.
Robots are evolving from machines that follow fixed scripts to become context aware, enabling automation in more complex environments. Robotics is a fast-growing market, with projected revenues in the magnitude of about $70 billion by 2040.23 Thanks to gen AI, a new generation of robots can sense issues and act on them.24 Robots are no longer limited to performing standardized tasks in controlled settings, allowing them to handle labor-intensive tasks and enabling human workers to focus on more strategic and value-added activities.
Currently, applications are still focused on warehouses and backrooms. The jury is still out on whether AI-powered robots can work safely and reliably under the challenging conditions typical of grocery, such as stores with tight spaces, changing layouts, and employees moving around in unpredictable ways. As a result, near-term value is mostly concentrated on repetitive tasks in structured environments, such as distribution centers and backrooms. For example, a Belgian e-grocery distribution center is experimenting with autonomous robots that bring totes to picking stations, aiming for a productivity uplift of about 35 percent. In the future, robots could also locate lost items, resolve picking mistakes, and sort items under variable conditions.
Pioneering grocers are testing use cases on the shop floor. Examples of potential applications include counting inventory, identifying missing products on shelves, and replenishing shelves autonomously. Take, for instance, a major Japanese convenience retailer that has piloted in-store robots to clean and restock shelves, aiming for a workload reduction for human workers of about 30 percent. AI-powered robots could soon also perform some consumer-facing roles, provided safety concerns are resolved and consumer acceptance grows.
The strategic question is shifting from which robot to buy to how to design the right ecosystem, scaling path, and change management. Relevant decisions for retailers include what to build versus what to buy, what data to share, and what intellectual property to retain. It will become critical to cultivate a portfolio of partners, including start-ups, and use external capabilities where they are commoditized. At the same time, sensitive information must be protected. Effective scaling will require prioritizing the highest-value use cases and building the enabling foundation: reliable data (such as consistent product identifiers, clean inventory signals, and well-labeled exceptions), interoperable infrastructure, and revised hybrid human–robot operating models.
At this point, physical AI in retail is still an early stage concept, and broad deployment across store networks will likely take a decade. Over the next couple of years, the focus typically will be on structured scouting and experimentation—testing solutions in controlled store and warehouse environments, building learning advantages, and making modular, low-regret investments until unit economics and reliability are proven at scale.
12. The technology ROI question
Despite increasing technology spending, measuring tech ROI remains a challenge. With the next wave of agentic technology investments around the corner, now is the time to create clarity.
While IT spending is growing, grocers struggle to measure tangible business value from these expenses. According to our analysis, enterprise IT technology expenses have increased at 8 percent annually between 2021 and 2025, close to double the industry growth rate, and further increases are expected. Productivity gains and value realization, however, are lagging behind. Challenges include large existing tech debt, complex and costly environments, and a focus on short-term experimentation rather than value-driven, long-term adoption. AI adoption requires a technology upgrade, but new technology does not automatically translate into value. Companies can struggle with building the foundations (for example, robust IT and data infrastructure) and relevant capabilities (such as qualified specialists) in their efforts to scale use cases.25
The way agents interact with systems necessitates upgrades in existing technology. Agents don’t use the same interfaces as employees. Rather, they work seamlessly with multimodal data residing in different systems. They are able to make direct updates, thereby changing the role of traditional systems of record. And while most systems are built for human–system interactions, agentic interactions with systems are different—agents can launch thousands of other agents to update critical information, such as product master data, within seconds, triggering potential overloads in traditional systems. Fortunately, agentic technology can also help improve IT engineering productivity. Leading grocers are changing the way software is developed. They use hundreds of agents that produce code overnight. This code is then reviewed by a small team during the day, increasing tech productivity by a factor of 20.26
Growing investments in AI make it increasingly important for grocers to measure and manage tech ROI. Technology spending tends to be scattered across P&L and the balance sheet, internally and externally, as well as across departments. Most grocers fall into one of three tiers when it comes to measuring tech ROI. Tier 1 includes getting transparency on spending across capital expenditure and operating expenditure, as well as differentiating between insourced and outsourced spending and between direct and shadow spending (tech-related costs in other departments). Those in Tier 2 use clearly defined input and output metrics in a broader set of areas, including engineering productivity; cost savings; delivery consistency; and quality, velocity, security, and compliance. Grocers in Tier 3 take a total cost-of-ownership perspective, shifting from project-based ROI to portfolio-based logic, incorporating time-to-value, and capturing learning benefits, not just cost efficiency. They pursue an outcome-driven prioritization of tech demand and are moving toward a continual reprioritization, rather than annual budgeting cycles (Exhibit 10).
